Assume the Following Bid and Ask Rates of the Pound

Multiple Choice

Assume the following bid and ask rates of the pound for two banks as shown below:
$$\begin{array} { l l l } & \underline { \text { Bid } } & \underline { \text { Ask } } \\\text { Bank C } & \$ 1.61 & \$ 1.63 \\\text { Bank D } & \$ 1.58 & \$ 1.60\end{array}$$
As locational arbitrage occurs:

A) the bid rate for pounds at Bank C will increase; the ask rate for pounds at Bank D will increase.
B) the bid rate for pounds at Bank C will increase; the ask rate for pounds at Bank D will decrease.
C) the bid rate for pounds at Bank C will decrease; the ask rate for pounds at Bank D will decrease.
D) the bid rate for pounds at Bank C will decrease; the ask rate for pounds at Bank D will increase.